Tokyo: Japan’s benchmark Nikkei 225 stock index may exceed 40,000 in 2024, topping the record high of 38,915 marked in 1989, some strategists said Friday.

They think Japanese stocks will remain firm throughout the year amid expectations for improved corporate earnings.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., predicted that the Nikkei will reach 41,800 at the end of December. On Friday, the Nikkei ended at 35,577.11.

Those strategists expect investors both at home and abroad to become more active as earnings improve at semiconductor-related and other Japanese firms while the U.S. Federal Reserve is expected to cut interest rates.

“The Japanese economy is solid, and wage increases will be higher than last year,” Ichikawa said.

Hikaru Yasuda, chief equity strategist at SMBC Nikko Securities Inc., said that “investors are paying close attention” to companies’ actions to improve their capital efficiency following a request by the Tokyo Stock Exchange.

Mutsumi Kagawa, chief global strategist at Rakuten Securities Inc.’s Economic Research Institute, said that he is focusing on the impact of the expansion of Japan’s NISA small-lot investment promotion program at the beginning of the year.

“Individual investors’ money is going not just to foreign stocks but also to Japanese stocks,” Kagawa said.

Meanwhile, Hiromi Ishihara, head of the equity investment department at Amundi Japan Ltd., said that there was a sense of overheating from Japanese stocks’ surge from the start of the year.

Ishihara noted downside risks such as slowing U.S. and Chinese economies and a rapid appreciation of the yen.

“Japanese stocks are no longer viewed as being cheap,” Shingo Ide, chief equity strategist at NLI Research Institute, said, suggesting that the Nikkei is unlikely to head significantly higher.

JIJI Press